Trust Distribution

Thomas Bullock tbullock at nd.edu
Thu Oct 14 10:17:28 EDT 2010


Good to know how things differ around the world!

Tom	

> -----Original Message-----
> From: Alex Hill [mailto:alex_hill at arach.net.au]
> Sent: Thursday, October 14, 2010 9:50 AM
> To: Thomas Bullock; Christopher Singley
> Cc: gnucash-user at gnucash.org
> Subject: Re: Trust Distribution
> 
> I think there is also a difference in the US and Australian laws. While
> a
> trust is a seperate legal entity, there is no limited liability etc, so
> it
> is more a way for a trustee to distribute income to others (among other
> things). That is why in Australia most trusts have a company trustee so
> that
> limited liability holds through from the trust.
> 
> Cheers,
> Alex
> ----- Original Message -----
> From: "Thomas Bullock" <tbullock at nd.edu>
> To: "Christopher Singley" <csingley at gmail.com>; "Alex Hill"
> <alex_hill at arach.net.au>
> Cc: <gnucash-user at gnucash.org>
> Sent: Thursday, October 14, 2010 9:34 PM
> Subject: RE: Trust Distribution
> 
> 
> Christopher,
> 
> >
> > > So theoretically the monthly distributions are simply advanced
> > distributions from what they would be owed at the end of the period.
> > Would you use liability accounts for this?
> [<Tom:>]
> It depends on the trust document's specifications.  The assumption in
> my
> comments is that a legal entity exists based on a legal trust document.
> If
> that does not exist, then the whole conversation changes.
> 
> If the trust is a legal entity, and the document specifies a legal
> obligation, then yes, you would set up liability accounts in order for
> the
> books to reflect the reality of the situation.
> 
> >
> > Is there in fact a legal obligation to distribute the trust income,
> or
> > are you speaking more informally in terms of each's fair share,
> > because you in fact intend to distribute all the income?
> [<Tom:>]
> Legal obligations generally are reflected in documents that establish
> their
> existence and the extent and nature of the obligation.  The documents
> are
> made, if for no other reason, at least for the purpose of being a
> record at
> the moment of agreement of the precise terms of the agreement.
> 
> If there is no document spelling out a legal obligation, there still
> may be
> a moral one based in the integrity of a person's character and a
> commitment
> made.  In any case, I am treating the trust as a separate entity that
> exists, and the remarks are made from that standpoint.
> 
> As far as I can see, there is no importance to the monthly distribution
> or a
> year-end distribution.  The monthly payments are made to mechanically
> satisfy the bank's requirement that deposits be made in order to
> satisfy
> interest calculation requirements, which Alex stated at the outset of
> this
> discussion.
> 
> HTH,
> 
> Tom
> 



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